How housing scarcity influences everything

Laetitia@Work #81

Hi everyone,

Having moved from Paris to London, then London to Munich and more recently from Munich back to Paris, I've been able to assess first hand the extreme tensions on the housing markets in these three (extremely expensive) cities. Finding adequate housing was a huge source of stress each time.

In my public speaking about the future of work, I'm often asked about "meaning at work" or "generational differences" and my answer is often "housing". Indeed it has become a major bottleneck in the world of work. Insufficient housing explains a lot…

Housing shortages represent much more than an isolated economic issue. They function as an invisible hand shaping nearly every aspect of working lives, social structures, and even our most personal decisions. Economists John Myers, Sam Bowman, and Ben Southwood cleverly came up with "the housing theory of everything" - the idea that housing shortages lie at the root of many seemingly unrelated societal challenges.

Try listing every problem the Western world has at the moment. (…) you might include slow growth, climate change, poor health, financial instability, economic inequality, and falling fertility. These longer-term trends contribute to a sense of malaise that many of us feel about our societies. They may seem loosely related, but there is one big thing that makes them all worse. That thing is a shortage of housing: too few homes being built where people want to live.

Here are some thoughts about the continuous relevance of “the housing theory of everything”.💡👇

The new geography of work

The digital revolution promised freedom from geography. But instead of dispersing, knowledge work has concentrated in dense urban centres. Cities like San Francisco, New York, London, and Paris have become super-magnets for tech, finance, and creative industries. These "superstar cities" offer higher wages, more opportunity, and vibrant cultural scenes. But there's a critical catch: these cities have systematically failed to build enough housing to accommodate their growing workforces. The consequences have been severe and have affected many aspects of life and work.

The housing shortage particularly impacts the relationship between knowledge work and service jobs. For every well-paid person in knowledge work (who can theoretically telework), there are approximately five people in service work who usually earn significantly less. These "essential” workers – in hospitality, restaurants, elderly care, childcare, healthcare, and other service sectors – serve knowledge (and other service) workers, care for their children, clean offices, and prepare meals. Unlike knowledge workers, they cannot be performed remotely: they must live within a reasonable distance of where the work is located.

Therein lies the fundamental problem. As housing becomes increasingly unaffordable in city centres where high-paying jobs concentrate, service workers are forced to live farther away, thus forced to endure longer and longer commutes. This spatial mismatch not only makes daily life harder for the essential workers but it also increases recruiting difficulties for businesses that depend on them.

In Paris, newcomers find it increasingly hard to access housing. According to this recent Le Monde piece, even professionals earning €3,000 per month (well above average) struggle to find adequate housing near their workplaces. For many, the only options are cramped "chambres de bonne" or distant suburbs, resulting in hours spent daily commuting. The employers have started noticing. A woman who runs three beauty institutes in Paris's 15th arrondissement, has nearly all her twenty employees living outside Paris, "often really far away." This means they're "subject to transportation disruptions," potentially forcing business closures during strikes. She's already had to reduce opening hours due to staffing challenges.

👉 Also read Laetitia@Work #35. Brave New Home.

The great mismatch

This housing shortage creates what economists call a "spatial mismatch" - workers cannot live where the jobs are. The consequences affect the entire economy:

• Reduced productivity: When housing near productive cities is scarce, many talented people are priced out entirely, preventing them from accessing better-paying jobs. Those who do manage to live in high-productivity areas often lack access to the complementary skills of colleagues priced out of the market. As Bowman, Southwood, and Myers observe:

  When housing is scarce in high-productivity areas, some people are priced out of the area altogether, so they can't move within range of better jobs. This means that many people are working in less productive jobs than they could if it was easier for them to move to more productive places.

• Innovation slowdown: Nearly all innovation happens in cities. Research on over 600,000 patents filed from 2000-2010 shows that high-density environments generate more breakthroughs.

  Geographical closeness is especially important for the transfer and combination of ideas. And for unconventional ideas, the most valuable combinations are often not obvious in advance and may depend on chance interactions or mixing of individual elements.

• Widening inequality: As economist Thomas Piketty demonstrated, economic growth in most Western countries now accrues more to landowners than to workers. The rising inequality he identified appears largely driven by housing shortages turning "houses into gold."

  Constraints on supply have made houses into scarce assets, more like bonds, fine art or precious metals than durable goods like refrigerators or cars (…) The aggregate, countrywide effect of housing being so limited in supply has been that economic growth in most Western countries has accrued more and more to landowners and less to everyone else.

• Regional divides: Expensive housing in productive cities prevents low and middle-income workers from moving to opportunity. Between 1880 and 1980, poorer US states caught up with richer ones at around 2% per year; since then, this convergence has halved.

  Many Western countries have regions where the most economically productive people have moved away like this, leaving behind their lower-skilled peers competing for a limited supply of lower-wage jobs and driving wages down further.

Gender and care

The housing crisis disproportionately affects women and caregivers. When housing is scarce and expensive, it fundamentally reshapes family formation and care work. First, housing costs directly impact family planning. Across the developed world, women consistently have fewer children than they say they would like. The more expensive an extra bedroom is, the more expensive it is to have more children.

For women with children, expensive housing creates difficult choices. Living in affordable areas often means long commutes that make balancing work and family nearly impossible. Living closer to work means financial strain or substandard housing conditions. These compromises fall disproportionately on women, who still perform the majority of childcare and domestic labour. Housing scarcity intensifies the "second shift" for women. Each hour spent commuting is an hour unavailable for care work, creating cascading stresses that affect career advancement, mental health, and family wellbeing.

👉 Also read Laetitia@Work #25: We need (feminist) cities

Recruiting difficulties

For employers, the housing crisis has become the invisible barrier to talent acquisition. Major employers have started taking extraordinary measures. The French railway company SNCF now offers a "housing guarantee" to new recruits in the Paris region, promising accommodation within four months and near their workplace, at social housing prices. The Parisian hospital system AP-HP offers subsidised housing to attract nurses and other healthcare workers, with rents 50% below market rates.

But these corporate solutions are limited in scale and create problematic dependencies. When housing is tied to employment, losing one's job means losing one's home - thus making workers "more vulnerable."

Young professionals with good incomes are increasingly facing housing challenges that were once limited to lower-income groups. Even those with permanent contracts (“CDI”) and salaries around €3,000 per month struggle to find adequate housing in Paris. Many resort to compromises like distant commutes, shared accommodations, or tiny apartments. For employers, this means staff subjected to transportation disruptions, increased turnover, and difficulty attracting talent.

These challenges contribute to generational differences in workplace expectations, with many younger workers prioritising remote work options that allow them to live in more affordable locations.

The housing theory of climate change

The housing crisis also undermines climate goals. When people cannot afford to live in walkable, transit-rich cities, they're pushed to car-dependent suburbs or relocate entirely to sprawling, high-emission regions.

In 2020, California's population shrank for the first time on record. High housing costs drove residents from relatively sustainable cities like San Francisco (with decent public transit and denser housing) to sprawling sunbelt cities like Atlanta, Phoenix, and Dallas that rely heavily on cars and air conditioning.

Walkable cities are not just important to combat obesity. In 2018, the average Japanese person's consumption caused 10.3 tonnes of CO2 emissions, while the average American caused 17.6 tonnes of emissions, or 74% more. Focusing on transport, we can see how much of that is explained by Japan's denser, transit-rich, more walkable cities. In 2016 transport accounted for 1.63 tonnes in Japan, versus 5.22 tonnes in the US – over three times worse. (...) Maps of the UK and US East Coast show clearly how the densely populated parts of cities like New York, Philadelphia and London emit far less carbon per head than the rest of the surrounding sprawl. The UK's Centre for Cities estimated that people living outside cities accounted for 50% more carbon emissions than those living inside them.

The connection between housing and climate change works in many ways:

• Dense, walkable cities reduce transportation emissions by enabling transit, walking, and cycling ;

• Apartment buildings are more energy-efficient than single-family homes ;

• New housing built to modern standards is generally more energy-efficient than older housing stock ;

• Preventing sprawl preserves natural carbon sinks like forests and agricultural land.

So what can we do?

Solving the housing crisis should be everyone’s priority because it would create enormous benefits across society. More housing in the densest, richest, most innovative cities would increase GDP significantly. Solutions require political courage. The following list isn’t exhaustive:

1. Build more homes where people want to live: Reform zoning to allow duplexes, townhouses, and apartments, especially near jobs and transit and encourage denser, mixed-use development in high-demand areas.

2. Speed up construction: Simplify and digitise the permitting process.

3. Use tax policy to incentivise the right things: Tax vacant homes and properties used only for speculation.

4. Limit harm from short-term rentals: Tax Airbnb-style rentals more to disincentivise short-term rentals, especially in areas with housing shortages.

5. Require affordable housing in new developments: Offer incentives (like extra height or fee reductions) when developers include more affordable units.

6. Invest in public, social, and cooperative housing: Support city- or non-profit-owned housing that's permanently affordable ; use surplus public land for affordable housing.

7. Offer portable housing support: Make housing assistance follow people, not jobs.

8. Make building cheaper and faster: Promote modular and prefab construction.

9. Involve employers: Big employers could be asked to help fund or provide worker housing.

Conclusion

Housing is where the personal becomes political. Every day, talented people make career decisions based not on their skills or passions, but on where they can afford to live. Others delay starting families because they can't find homes with enough bedrooms. Insufficient housing fuels resentment. Millennials and Gen Z workers face growing disillusionment with economic systems that seem rigged against them.

The "housing theory of everything" helps us see that these personal struggles aren't individual failures but systemic problems. When housing becomes a scarce, speculative asset rather than a basic need, it distorts everything else in society - from where we work to how we form families to the sustainability of our planet.

We should place housing at the centre of the conversation about work. Remote work offers a partial solution, allowing some knowledge workers to escape high-cost areas. But it's not enough. Many jobs still require physical presence, and even remote workers need affordable, quality housing or the services and infrastructures that are abundant in the densest areas.

The housing crisis isn't just a housing problem. It's an everything problem. And solving it might be the single most important step we can take toward creating a more sustainable future of work.

💡For Nouveau Départ, I wrote many new articles (in French):

• L’index qui cache la forêt

• Les jeunes et le travail : un amour déçu

• IA : Allons-nous tous finir débiles ?

• L'IA, nouveau souffle pour les syndicats ?

• Après la « pénalité maternelle », celle de la ménopause

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✨ Event in Paris. On June 3rd, I’ll be speaking at the Salon du Management about motivation and recognition at work — and why it’s time to break free from outdated industrial-era models. Let’s rethink what it means to feel seen, valued, and proud of the work we do. Join us for a day of inspiring talks, hands-on workshops, and fresh perspectives on the future of management! Don’t miss it! 🎤

🔗 Discover the programme here.

Miscellaneous

🚄 Europe Built Trains. America Built Highways and Regret., Dan Richards, The New York Times, May 2025: “as Europe embraces the night train, the United States seems to be sleepwalking into a transport dead end, slashing funding for public infrastructure and firing transit workers. Long-distance public transport in America may be heading inexorably toward a binary choice: fast, exclusive and environmentally ruinous or slow, tortuous and run-down.”

Don’t let housing stand in the way of thriving! 🏠🏗️🤗